Cash Converters to pay $12m after Asic probe

Perth-based Cash Converters International has agreed to refund $10.8 million to customers and pay a $1.3 million fine after enforceable undertakings were accepted by the corporate watchdog.

The Australian Securities and Investments Commission said today that Cash Converters would refund consumers who received small loans under about 118,000 credit contracts following concerns that the company failed to make reasonable inquiries into consumers’ income and expenses.

“In addition, Asic had concerns that Cash Converters did not take reasonable steps to verify consumers’ expenses in accordance with its responsible lending obligations,” Asic said.

“Instead of assessing the actual expenses recorded in a consumer’s bank statements, Cash Converters applied an internally generated assumed benchmark that had no relationship to the real expenses of the individual consumer.

“For the small amount loans that were likely to be unsuitable because of the consumer’s circumstances, Asic was concerned that Cash Converters failed to assess the loans as unsuitable for the particular consumers and subsequently entered into them in breach of the credit legislation.”

In a statement, Cash Converters said it would remediate certain customers who applied for, and were granted, the small credit contracts between July 2013 and June 2016.

“The company has been given an extensive release by Asic, and entry into the enforceable undertaking without admission of wrongdoing,” the company said.

Cash Converters shares were 3 per cent lower to 32 cents each at the close of trade.